- Growing economy, rising employment and low inflation help protect retiree savings; federal debt, income inequality, healthcare challenge U.S. global position
- Europe leads way, based on strong pension financing and social programs; longevity, increasing demand for social services and other factors could put pressure on financing in the future
- Retiree welfare vulnerable to government policy, economy and market trends; responsibility for financial security falling to individuals
BOSTON--(BUSINESS WIRE)--
The United States held steady in its ranking among the top 20 countries in the world for retirement security, according to the 2015 Natixis Global Retirement Index, published today by Natixis Global Asset Management. For the third consecutive year, the U.S. placed 19th among 150 nations, as benefits of the U.S. economic recovery offset growing demand on government finances.
"As our analysis shows, the security of retirees' savings is influenced by a range of factors largely out of their control," said John Hailer, president and chief executive officer for Natixis Global Asset Management in the Americas and Asia. "We're seeing that individuals will have to shoulder more of the financial burden by saving and investing more effectively to ensure financial security in retirement."
Now in its third year, the Natixis Global Retirement Index is based on an analysis of 20 key trends across four broad categories: health, material well-being, finances and quality of life. Together, these trends provide a measure of the life conditions and well-being expected by retirees and near-retirees.
While the U.S. got strong grades for its finances, largely due to low inflation and interest rates, and enjoyed higher Gross Domestic Product growth1, its position in the rankings may be fragile. The U.S. benefits from high per-capita income and spends more per capita on healthcare than any other nation. However, those resources don't reach all Americans. The U.S. has a relatively large gap in income equality, and Americans have access to fewer doctors and hospital beds than citizens in other developed nations.
Further, the U.S. population is aging and living longer. The proportion of the U.S. population over the age of 65 is expected to rise from 13% in 2010 to 21% in 2050.2 As a result, there will be fewer workers to pay for programs, such as Medicare and Social Security, that serve older Americans.
Europe leads in quality of retirement
Top-ranked countries in 2015 benefited from well-developed and growing industrialized economies with strong financial systems and regulations, broad access to healthcare, and substantial public investment in infrastructure and technology. Despite relatively heavy tax burdens, these countries rank high in per-capita income levels and low in income inequality.
"These countries currently lead the way, but could face headwinds as the citizens live longer in retirement and the cost of funding various programs continues to increase," said Hailer.
The index showed:
- Stability at the top: Switzerland retained its No. 1 ranking because of its high per-capita income, strong financial institutions and environment. Switzerland has a mandatory occupational pension system and a well-funded universal health system. Norway held the second spot on the strength of its widely shared wealth.
- Big leaps: Iceland jumped seven slots, to No. 4, because of structural changes in the nation's financial system after its banking crisis. The Netherlands rose to No. 5 from No. 13 on strengthened finances, while Japan's fiscal reforms and healthcare improvements helped it vault to No. 17 from No. 27.
- Down under policies working: Australia (No. 3) and New Zealand (No. 10) are two non-European countries in the top 10 due in large part to mandatory retirement savings programs.
"Bold public policies and a commitment to innovation are making the greatest contribution to the security of retirees in the top-ranked countries," Hailer said. "They offer valuable lessons for countries trying to improve their retirement systems and prepare citizens for financial security in retirement. In the U.S., we need to open access to work-based retirement programs so more Americans can put money away for their future needs."
Some progress is being made at the federal level, and the states are beginning to take action as well. Illinois, for example, recently introduced an automatic retirement savings program for workers in the state that don't already have a retirement plan at work, a first for the nation.3
The Top 20 nations, along with their standing in last year's study, were:
2015 Natixis Global Retirement Index – Top 20 Nations | |||||||||
| 1. Switzerland (No. 1 in 2014) | 6. Sweden (4) | 11. Luxembourg (10) | 16. Belgium (12) | ||||||
| 2. Norway (2) | 7. Denmark (6) | 12. Canada (14) | 17. Japan (27) | ||||||
| 3. Australia (5) | 8. Austria (3) | 13. Finland (8) | 18. France (15) | ||||||
| 4. Iceland (11) | 9. Germany (7) | 14. Korea, Rep. (17) | 19. United States (19) | ||||||
| 5. Netherlands (13) | 10. New Zealand (9) | 15. Czech Republic (16) | 20. Slovenia (21) | ||||||
Methodology
The report was compiled by Natixis Global Asset Management with support from CoreData Research, a United Kingdom-based financial research firm. The report captured data from a variety of sources, including the World Bank and United Nations. The researchers calculated a mean score in each category and combined the category scores for a final overall ranking of the 150 nations studied. Categories measured include:
- Health in Retirement Index (Life Expectancy at Birth Index; Health Expenditure per-Capita Index; Physicians per 1,000 People Index; Non-insured Health Expenditure Index; Hospital Beds Index)
- Material Well-being in Retirement Index (Income per-Capita Index; Income Equality Index; Unemployment Index)
- Finances in Retirement Index (Investment Environment Index; Old Age Dependency Index; Inflation Index; Real Interest Rate Index; Tax Pressure Index; Bank Non-performing Loan Index; Government Indebtedness Index; Institutional Strength Index.)
- Quality of Life and Environmental Index (Happiness Index; Air Quality Index; Water and Sanitation Index; Biodiversity and Habitat Index; Climate Change and Energy Index)
For a more detailed overview of the 2015 Natixis Global Retirement Index, including the rankings of all 150 nations evaluated, go to www.durableportfolios.com.
1 Real gross domestic product – the value of the production of goods and services in the United States, adjusted for price changes – increased at an annual rate of 5.0 percent in the third quarter of 2014, according to the "third" estimate released by the Bureau of Economic Analysis; December 23, 2014, http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm
2 Pew Research Global Attitudes Project; January 30, 2014, http://www.pewglobal.org/2014/01/30/chapter-2-aging-in-the-u-s-and-other-countries-2010-to-2050/
3 The New York Times, "Illinois Introduces Automatic Retirement Savings Program, a First for the Nation," January 5, 2015, http://www.nytimes.com/2015/01/06/upshot/illinois-introduces-automatic-retirement-savings-program-a-first-for-the-nation.html?_r=1&abt=0002&abg=1
About Natixis Global Asset Management
Natixis Global Asset Management is a multi-affiliate organization that offers a single point of access to more than 20 specialized investment firms in the U.S., Europe and Asia. The firm ranks among the world's largest asset managers.1 Through its Durable Portfolio Construction® philosophy, the company is dedicated to providing innovative ideas on asset allocation and risk management that can help institutions, advisors and individuals address a range of modern market challenges. Natixis Global Asset Management brings together the expertise of multiple specialized investment managers based in Europe, the United States and Asia to offer a wide spectrum of equity, fixed-income and alternative investment strategies.
Headquartered in Paris and Boston, Natixis Global Asset Management, S.A.'s assets under management totaled $894.3 billion (€708.0 billion) as of September 30, 2014.2 Natixis Global Asset Management, S.A. is part of Natixis. Listed on the Paris Stock Exchange, Natixis is a subsidiary of BPCE, the second-largest banking group in France. Natixis Global Asset Management, S.A.'s affiliated investment management firms and distribution and service groups include Absolute Asia Asset Management; Active Investment Advisors;3 AEW Capital Management; AEW Europe; AlphaSimplex Group; Aurora Investment Management; Axeltis; Capital Growth Management; Darius Capital Partners; Dorval Finance;4 Gateway Investment Advisers; H2O Asset Management;4 Harris Associates; IDFC Asset Management Company; Loomis, Sayles & Company; Managed Portfolio Advisors;3 McDonnell Investment Management; Mirova;5 Natixis Asset Management; Natixis Environment & Infrastructure Luxembourg; Ossiam; Reich & Tang Asset Management; Seeyond;6Snyder Capital Management; Vaughan Nelson Investment Management; Vega Investment Managers; and Natixis Global Asset Management Private Equity, which includes Seventure Partners, Naxicap Partners, Alliance Entreprendre, Euro Private Equity, Caspian Private Equity and Eagle Asia Partners. Visit ngam.natixis.com for more information.
1 Cerulli Quantitative Update: Global Markets 2014 ranked Natixis Global Asset Management, S.A. as the 16th largest asset manager in the world based on assets under management as of December 31, 2013.
2Assets under management (AUM) may include assets for which non-regulatory AUM services are provided. Non-regulatory AUM includes assets which do not fall within the SEC's definition of 'regulatory AUM' in Form ADV, Part 1.
3Division of NGAM Advisors, L.P.
4 An affiliate of Natixis Asset Management.
5 A subsidiary of Natixis Asset Management.
6A global investment unit of the Natixis Asset Management organization, operated in the U.S. through Natixis Asset Management U.S., LLC.
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